UK Budget: Chancellor outlines plans to tackle offshore evasion, avoidance loopholes
22 Nov 2017

The United Kingdom is looking to further address abusive offshore tax schemes as well as make it easier for officials to assess back taxes linked to offshore jurisdictions, Chancellor Philip Hammond stated in his Budget.

The measures are part of the government’s plan to address abusive avoidance and evasion, which it hopes will raise up to £4.8 billion between 2017 and 2022-23.

The issue of tax evasion and complex offshore structures has been a topical issue in recent weeks in the UK, especially following the Paradise Papers which revealed the offshore arrangements and tax affairs of the wealthy and powerful, including the Queen.

According to Budget notes, the government will work with the Organisation for Economic Co-operation and Development (OECD) and European Union on the issue of tackling offshore structures.

Both the OECD and EU are considering whether multinational standards could help tackle the use of offshore structures for tax evasion purposes.

Meanwhile, the UK will soon give its feedback on proposed requirements for designers of such schemes to notify tax collector HMRC of these structures and the clients using them.

The government is also working on plans to extend offshore time limits regarding tax compliance.

“Assessment time limits for non-deliberate offshore tax non-compliance will be extended so that HMRC can always assess at least 12 years of back taxes without needing to establish deliberate non-compliance, following a consultation in spring 2018,” Budget notes state.

The Law Society on Wednesday warned changes to tax avoidance laws “needed to be advanced with caution.”

Law Society vice-president Christina Blacklaws said in statement on the organisation’s website: “While we support the government’s efforts to tackle aggressive tax avoidance and tax evasion, tax lawyers will need greater clarity. Solicitors play an important role in our tax system by advising their clients on how to remain compliant with the law.”

“Adding new rules and increasing complexity risks exacerbating the problem, rather than offering clear solutions. The government should ensure further avoidance measures do not deter taxpayers from obtaining honest legal advice.”

Other plans include tackling VAT fraud, insolvency and phoenixism risks.

“The government will explore further means for tackling the small minority of taxpayers who deliberately abuse the insolvency regime in trying to avoid or evade their tax liabilities, including through the use of phoenixism,” the notes explained.

In his Budget speech, Hammond told parliamentarians: “We are also taking further action to address online VAT fraud which costs the taxpayer £1.2 billion per year, [by] making all online marketplaces jointly liable for VAT and ensuring that sellers operating through them pay the right amount of VAT, just as we would expect traditional retailers to do.”

Treasury also gave an update on its disguised remuneration policy paper.

By KYC360

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